Korean battery makers are laying off hundreds of workers from their U.S. plants as part of efforts to cut production amid faltering demand for electric vehicles (EVs).
LG Energy Solution will cut 170 workers from its plant in Holland, Michigan, as its client automakers scramble to cut EV production, the company said Tuesday.
“The layoffs will occur in phases. Around 170 production team members will be laid off between December 2023 and January next year,” said a spokesperson for LG Energy Solution.
“The Michigan plant is transitioning and retooling some production lines from our current production facility to our second factory within our Holland site.”
The expansion project for the second facility in Michigan facility is well underway, LG Energy Solution added.
LG’s Michigan plant has a total of 1,500 workers. It has 5 gigawatt-hours of production capacity and supplies batteries to global automakers including General Motors (GM).
LG isn’t the only manufacturer taking such actions. SK On plans to furlough many of the workers at its battery plant in Jackson County, Georgia, as part of production cuts, the company said Tuesday.
The duration of the furloughs and the number of impacted workers have not been disclosed — though SK On has emphasized that they are not layoffs.
“We have taken the decision as a part of our efforts to optimize line operations and workforce management with flexibility, as the EV industry is adjusting its pace of growth,” said an SK On spokesperson.
The plant, which was opened in 2022 in Commerce, Georgia, has 22 gigawatt-hours of annual production capacity. It currently employs around 3,000 workers and has supplied EV batteries to Ford and Volkswagen.
SK On laid off an undisclosed number of employees from the same plant back in September. That round is likely to have impacted fewer than 500 employees, as U.S. law requires firms to make regulatory filings if they reduce their workforce by more than 500.
Samsung SDI, meanwhile, confirmed that “no layoff or furlough is planned for now” in their overseas plants.
EV sales are drastically slowing down. A total of 4.34 million EVs were sold in the first half of this year, according to data from market tracker MarkLines. That number represents an on-year gain of 41 percent, but fell far short of 2021’s 115 percent skyrocket growth and 2022’s 61.2 percent growth.
LG Energy Solution scrapped plans to build a joint EV battery plant with Ford and Koc Holding in Turkey earlier this week.
That factory was to have an annual production capacity of 45 gigawatt-hours — enough to produce 500,000 EVs per year. The construction was scheduled to start as early as the end of 2023, with production beginning in 2026.
LG Energy also delayed production at its joint battery plant in Tennessee by a few months as GM downsizes its EV production capacity.
The Tennessee plant in Spring Hill, which was set to be operational at the end of 2023, will now start operations in early 2024.
The Tennessee plant is Ultium Cells’ second plant in North America; the company also operates facilities in Ohio and Michigan. Ultium Cells — which was formed in 2019, is a 50:50 joint venture between LG Energy Solution and GM — previously vowed to invest a total of 8.4 trillion won ($6.35 billion) in the three plants.
GM withdrew its goal of producing 400,000 EVs by the first half of next year amid the waning demand. The automaker has also delayed the production of electric pickup trucks at its Michigan plant by one year.
SK On also pushed back the operation of its Kentucky plant — which is a joint venture with Ford — amid weakening EV sales.
The two are building a total of three factories in the United States — one in Tennessee and two in Kentucky. The second Kentucky plant was scheduled to begin operating in 2026, but that has also been delayed.
Tesla CEO Elon Musk also hinted at a possible delay to the construction of the company’s Mexico plant and the mass production of its Cybertrucks. Tesla reported a 44 percent on-year drop in its net profit in the third quarter.
BY SARAH CHEA [firstname.lastname@example.org]